Social Research Glossary A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Home
Citation reference: Harvey, L., 2012-24, Social Research Glossary, Quality Research International, http://www.qualityresearchinternational.com/socialresearch/
This is a dynamic glossary and the author would welcome any e-mail suggestions for additions or amendments.
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Capitalism
Capitalism is an economic and social system in which private capital or wealth is used in the production and distribution of goods.
In such a system the accumulation of capital occurs when owners of capital (productive plant, etc) appropriate the value of the wealth created by non-owners/workers which is surplus to the value of the incomes paid to workers. This surplus value is usually referred to as profit and profit-making is a legitimate activity in capitalist systems.
The Socialist Party of Great Britain (2013) states
What is Capitalism?
The word capitalism is now quite commonly used to describe the social system in which we now live. It is also often assumed that it has existed, if not forever, then for most of human history. In fact, capitalism is a relatively new social system.
But what exactly does 'capitalism' mean?
Class division
Capitalism is the social system which now exists in all countries of the world. Under this system, the means for producing and distributing goods (the land, factories, technology, transport system etc) are owned by a small minority of people. We refer to this group of people as the capitalist class. The majority of people must sell their ability to work in return for a wage or salary (who we refer to as the working class.)
The working class are paid to produce goods and services which are then sold for a profit. The profit is gained by the capitalist class because they can make more money selling what we have produced than we cost to buy on the labour market. In this sense, the working class are exploited by the capitalist class. The capitalists live off the profits they obtain from exploiting the working class whilst reinvesting some of their profits for the further accumulation of wealth.
The ideologically opposite view comes from Encyclopædia Britannica (2013)
capitalism, also called free market economy, or free enterprise economy, economic system, dominant in the Western world since the breakup of feudalism, in which most of the means of production are privately owned and production is guided and income distributed largely through the operation of markets.
Investopedia (2013) expands this
Definition of 'Capitalism'
An economic system based on a free market, open competition, profit motive and private ownership of the means of production. Capitalism encourages private investment and business, compared to a government-controlled economy. Investors in these private companies (i.e. shareholders) also own the firms and are known as capitalists.
Investopedia explains 'Capitalism'
In such a system, individuals and firms have the right to own and use wealth to earn income and to sell and purchase labor for wages with little or no government control. The function of regulating the economy is then achieved mainly through the operation of market forces where prices and profit dictate where and how resources are used and allocated. The U.S. is a capitalistic system.
Investopedia in an update to the article in 2019 restates this
What Is Capitalism?
Capitalism is an economic system in which capital goods are owned by private individuals or businesses. The production of goods and services is based on supply and demand in the general market (market economy), rather than through central planning (planned economy or command economy). The purest form of capitalism is free market or laissez-faire capitalism, in which private individuals are completely unrestrained in determining where to invest, what to produce or sell, and at which prices to exchange goods and services, operating without checks or controls. All modern countries practice a mixed capitalist system of some sort that includes government regulation of business and ownership of select industries.
Rayaynet Sociology Glossary (undated) defines capitalism as follows:
(Given the importance of this concept to this dictionary and to the social reality that we face each day, we choose to yield to the socialist G. D. H. Cole.) "The term capitalism denotes and economic system in which the greater proportion of economic life, particularly ownership of and investment in production goods, is carried on under private (i.e., non-governmental) auspices through the process of economic competition and the avowed incentive of profit... Capitalism is often regarded as passing through three successive stages, beginning with commercial capitalism, under which large-scale operators come to dominate the process of exchange, running on with the Industrial Revolution, into the stage of industrial capitalism, dominated by the owners of large factories, mines, and other industrial enterprises, and then to the stage of finance, or financial capitalism, in which control passes more and more into the hands of bankers and financiers dominating industrial enterprises to which they advance money, or to great investors divorced from the day-to-day management of industrial enterprises, but controlling them and extracting profit from them by their financial power. These stages are not, of course, mutually exclusive: the earlier do not cease to exist when the lager are superimposed upon them. Reference is sometimes made to a fourth form, state capitalism, defined by Lenin as a system under which the State takes over and exploits means of production in the interest of the class which controls the state... Still a fifth form is frequently described in the literature concerned with those economies in which there is an increased element of state intervention either in terms of welfare programmes or of responsibility for employment and lessening the impact of the business cycle. This form is denoted by such phrases as welfare capitalism or protected capitalism..." - From G. D. H. Cole, "Capitalism," in Julius Gould and William L. Kolb, editors, A Dictionary of the Social Sciences (New York: The Free Press of Glencoe, 1964), pp. 70-71.
The McGraw-Hill (2004) Sociological Theory site Glossary defines capitalism as
An economic system composed mainly of capitalists and the proletariat, in which one class (capitalists) exploits the other (proletariat). (Marx)
Elwell's Glossary of Sociology (undated) defines capitalism as:
An economic system based on the private ownership of the means of production and distribution in which the goal is to produce profit.
See also
Encyclopædia Britannica, 2013, 'Capitalism', available at http://www.britannica.com/EBchecked/topic/93927/capitalism
Investopedia, 2013, 'Capitalism' available at http://www.investopedia.com/terms/c/capitalism.asp#axzz2JdeBMiTM
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